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 SJW Corp. Announces 2015 Annual and Fourth Quarter Financial Results
   Thursday, February 18, 2016 6:30:00 PM ET

SJW Corp. (SJW ) today reported operating revenue for the year ended December 31, 2015 of $305.1 million versus $319.7 million for the year ended December 31, 2014, a decrease of $14.6 million. In 2015, we recognized $37.8 million in cumulative rate increases, $20.5 million related to revenue tracked in our Water Conservation Memorandum Account, $1.9 million in additional 2012 General Rate Case (GRC) true-up revenue, and $1.2 million in revenue from new customers. These operating revenue increases were partially offset by $36.3 million in lower customer usage. The remaining decrease was attributable to one-time 2014 activity which included the recognition of $46.5 million recognized in the third quarter of 2014 related to the Company’s 2012 GRC decision, offset by a $6.8 million change in the net recognition of certain balancing and memorandum accounts primarily related to the 2014 Pension Balancing Account true-up resulting from the 2012 GRC decision.

Water production expenses for the year ended December 31, 2015 were $110.6 million compared to $122.7 million in 2014, a decrease of $12.1 million. The decrease in water production expenses was attributable to $21.5 million in lower customer water usage and $2.6 million in lower expenses due to an increase in the use of available surface water supplies, offset by $12.0 million in higher per unit costs for purchased water, groundwater extraction and energy charges. Operating expenses, excluding water production costs, increased $10.5 million to $114.5 million from $104.0 million. The increase was due to $6.6 million of higher administrative and general expenses, $2.8 million of higher depreciation expenses, $581,000 in higher property taxes and other non-income taxes and $482,000 in higher maintenance expenses. The increase in administrative and general expenses was primarily attributable to higher pension costs, costs related to the California General Rate Case proceeding and other activities.

Other expense and income in 2015 included the sale of multiple real estate properties for a gain of approximately $1.9 million. Other expense and income during the same period of 2014 included a gain on the sale of 125,969 shares of California Water Service Group stock of $2.0 million and sales of real estate property in California and real estate investment property in Texas of approximately $300,000 each.

The effective consolidated income tax rates were 38% and 33% for the years ended December 31, 2015 and 2014, respectively. The change in the effective consolidated income tax rate was primarily due to a state income tax benefit of $5.1 million recognized in 2014 related to the adoption of new Department of Treasury and Internal Revenue Service Tangible Property Regulations.

Net income was $37.9 million for the year ended December 31, 2015, compared to $51.8 million for the same period in 2014. Diluted earnings per share were $1.85 and $2.54 for the years ended December 31, 2015 and 2014, respectively.

Fourth Quarter Financial Results

Operating revenue for the fourth quarter ended December 31, 2015 was $87.6 million versus $69.3 million for the same period in 2014, an increase of $18.3 million. The increase was attributable to recognition of $20.5 million in revenue tracked in the Water Conservation Memorandum Account, $4.7 million in cumulative rate increases, a net increase in the recognition of certain balancing and memorandum accounts of $921,000 and $166,000 in revenue from new customers, offset by $7.9 million in lower customer usage.

Water production expenses for the fourth quarter of 2015 were $26.9 million compared to $26.7 million in 2014, an increase of $200,000. The increase in water production expenses was attributable to $2.7 million in higher per unit costs for purchased water, groundwater extraction and energy charges and $513,000 in higher expenses due to a decrease in the use of available surface water supply. These increases were partially offset by $3.0 million in lower customer water usage. Operating expenses, excluding water production expenses, increased $2.0 million to $29.0 million from $27.0 million. The increase was due to $1.2 million in higher administrative and general expenses, $733,000 of higher depreciation expense and $117,000 in higher maintenance expenses. The increase in administrative and general expenses was primarily attributable to higher pension costs.

Other expense and income in the fourth quarter of 2014 included the recognition of income related to contributions in aid of construction in 2014.

The effective consolidated income tax rates were 39% and 50% for the quarters ended December 31, 2015 and 2014, respectively. Income tax expense for the quarter ended December 31, 2014 included a reduction in the state income tax benefit of $500,000 related to the adoption of new Department of Treasury and Internal Revenue Service Tangible Property Regulations and an increase in income tax expense related to an adjustment to true-up deferred tax related to fixed assets of $500,000.

Net income was $16.2 million for the fourth quarter ended December 31, 2015, compared to $5.7 million in 2014. Diluted earnings per share were $0.79 in the quarter ended December 31, 2015, compared to $0.28 per diluted share for the same period in 2014.

SJW Corp. is a publicly traded holding company headquartered in San Jose, California. SJW Corp. is the parent company of San Jose Water Company, SJWTX, Inc., Texas Water Alliance Limited, SJW Land Company, and SJW Group, Inc. Together, San Jose Water Company and SJWTX, Inc. provide water service to more than one million people in San Jose, California and nearby communities and in Canyon Lake, Texas and nearby communities. SJW Land Company owns and operates commercial real estate investments.

This press release may contain certain forward-looking statements including but not limited to statements relating to SJW Corp.’s plans, strategies, objectives, expectations and intentions, which are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of SJW Corp. to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Results for a quarter are not indicative of results for a full year due to seasonality and other factors. Other factors that may cause actual results, performance or achievements to materially differ are described in SJW Corp.’s most recent reports on Form 10-K, Form 10-Q and Form 8-K filed with the Securities and Exchange Commission. SJW Corp. undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 
                                                                                                                                         SJW Corp.
                                                                                                                 Condensed Consolidated Statements of Comprehensive Income
                                                                                                                                        (Unaudited)
                                                                                                                           (in thousands, except per share data)
 
                                                                                           Three months ended December 31,                                                              Twelve months ended December 31,
                                                                              ----------------------------------------------------------------------------------------                           ------------------------------------------------------------------------------------
                                                                                              2015                                   2014                                                     2015                                 2014
                                                                              -------------------------------------                     ------------------------------------                     -------------------------------------                     --------------------------------
OPERATING REVENUE                                                                   $  87,613                                69,286                              $ 305,082                           319,668  
                                                                              ------- ------- --------------------                      -------------- --------------------                      ------- ------- --------------------                      ---------- --------------------
OPERATING EXPENSE:
   Production Expenses:
      Purchased water                                                                  13,718                                                    9,992                                                    61,089                                               47,280
      Power                                                                               921                                                    2,300                                                     6,121                                                9,865
      Groundwater extraction charges                                                    9,187                                                   11,428                                                    31,240                                               53,678
      Other production expenses                                                         3,083                                 2,993                                 12,178                            11,929  
                                                                              ------------------------------------                      -------------- --------------------                      ------------------------------------                      ---------- --------------------
   Total production expenses                                                           26,909                                                   26,713                                                   110,628                                              122,752
   Administrative and general                                                          12,270                                                   11,039                                                    47,131                                               40,573
   Maintenance                                                                          3,769                                                    3,652                                                    14,956                                               14,474
   Property taxes and other non-income taxes                                            2,789                                                    2,835                                                    11,667                                               11,086
   Depreciation and amortization                                                       10,191                                 9,458                                 40,740                            37,905  
                                                                              ------------------------------------                      -------------- --------------------                      ------------------------------------                      ---------- --------------------
         Total operating expense                                                       55,928                                53,697                                225,122                           226,790  
                                                                              ------------------------------------                      -------------- --------------------                      ------------------------------------                      ---------- --------------------
OPERATING INCOME                                                                       31,685                                                   15,589                                                    79,960                                               92,878
OTHER (EXPENSE) INCOME:
Interest expense                                                                       (5,400 )                                                 (5,567 )                                                 (22,186 )                                            (20,788 )
Gain on sale of California Water Service Group stock                           --                                           --                                            --                                                2,017
Other, net                                                                                443                                 1,253                                  3,380                             2,670  
                                                                              ------------------------------------                      -------------- --------------------                      ------------------------------------                      ---------- --------------------
Income before income taxes                                                             26,728                                                   11,275                                                    61,154                                               76,777
Provision for income taxes                                                             10,536                                 5,587                                 23,272                            24,971  
                                                                              ------------------------------------                      -------------- --------------------                      ------------------------------------                      ---------- --------------------
NET INCOME                                                                             16,192                                 5,688                                 37,882                            51,806  
                                                                              ------------------------------------                      -------------- --------------------                      ------------------------------------                      ---------- --------------------
Other comprehensive income (loss), net                                                    176                                                      333                                                      (206 )                                                301
Reclassification adjustment for gain realized on sale of                       --                        --                         --                            (1,171 )
investments, net
                                                                              --------------  --------------------                      -------------- --------------------                      --------------  --------------------                      ---------- --------------------
COMPREHENSIVE INCOME                                                                $  16,368                                 6,021                              $  37,676                            50,936  
                                                                              ======= ======= ====================                      ============== ====================                      ======= ======= ====================                      ========== ====================
                                                                                                                                                                                                                                                            
EARNINGS PER SHARE
   Basic                                                                            $    0.79                                                     0.28                                                 $    1.86                                                 2.56
   Diluted                                                                          $    0.79                                                     0.28                                                 $    1.85                                                 2.54
DIVIDENDS PER SHARE                                                                 $    0.20                                                     0.19                                                 $    0.78                                                 0.75
WEIGHTED AVERAGE SHARES OUTSTANDING
   Basic                                                                               20,382                                                   20,268                                                    20,361                                               20,227
   Diluted                                                                             20,548                                                   20,459                                                    20,516                                               20,417
 
                                                                        SJW Corp.
                                                          Condensed Consolidated Balance Sheets
                                                                       (Unaudited)
                                                                     (in thousands)
 
                                                                            December 31,         December 31,
                                                                                                   2015                                    2014
                                                                                             ---------------                       --------------------
ASSETS
Utility plant:
   Land                                                                                           $    17,853                                    16,838
   Depreciable plant and equipment                                                                  1,438,321                                 1,353,772
   Construction in progress                                                                            45,573                                    23,208
   Intangible assets                                                                                   22,675                                    19,333
                                                                                             -----------------                     --------------------
      Total utility plant                                                                           1,524,422                                 1,413,151
Less accumulated depreciation and amortization                                                        487,659                                   450,137
                                                                                             -----------------                     --------------------
      Net utility plant                                                                             1,036,763                                   963,014
                                                                                             -----------------                     --------------------
                                                                                                                                    
Real estate investments                                                                                74,641                                    73,794
Less accumulated depreciation and amortization                                                         13,157                                    11,593
                                                                                             -----------------                     --------------------
      Net real estate investments                                                                      61,484                                    62,201
                                                                                             -----------------                     --------------------
CURRENT ASSETS:
   Cash and cash equivalents                                                                            5,239                                     2,399
   Accounts receivable and accrued unbilled utility revenue                                            46,851                                    45,327
   Current regulatory assets, net                                                                      16,542                                    16,853
   Other current assets                                                                                 4,744                                     3,514
                                                                                             -----------------                     --------------------
      Total current assets                                                                             73,376                                    68,093
                                                                                             -----------------                     --------------------
OTHER ASSETS:
   Investment in California Water Service Group                                                         6,030                                     6,378
   Debt issuance costs and other, net of accumulated amortization                                       4,721                                     5,218
   Regulatory assets, net                                                                             152,021                                   158,010
   Other                                                                                                6,568                                     6,390
                                                                                             -----------------                     --------------------
                                                                                                      169,340                                   175,996
                                                                                             -----------------                     --------------------
                                                                                                  $ 1,340,963                                 1,269,304
                                                                                             ====== =========                      ====================
                                                                                                                                    
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
   Common stock                                                                                   $    10,616                                    10,567
   Additional paid-in capital                                                                          68,636                                    66,298
   Retained earnings                                                                                  302,220                                   280,773
   Accumulated other comprehensive income                                                               2,311                                     2,517
                                                                                             -----------------                     --------------------
      Total shareholders’ equity                                                                      383,783                                   360,155
   Long-term debt, less current portion                                                               380,825                                   384,365
                                                                                             -----------------                     --------------------
      Total capitalization                                                                            764,608                                   744,520
                                                                                             -----------------                     --------------------
CURRENT LIABILITIES:
   Line of credit                                                                                      34,600                                    13,200
   Current portion of long-term debt                                                                    3,491                                       584
   Accrued groundwater extraction charge, purchased water and purchased                                 7,163                                     6,030
   power
   Accounts payable                                                                                    16,196                                     7,001
   Accrued interest                                                                                     6,193                                     6,361
   Other current liabilities                                                                           11,980                                    11,518
                                                                                             -----------------                     --------------------
      Total current liabilities                                                                        79,623                                    44,694
                                                                                             -----------------                     --------------------
                                                                                                                                    
DEFERRED INCOME TAXES                                                                                 198,775                                   185,506
ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF
CONSTRUCTION                                                                                          217,766                                   211,805
POSTRETIREMENT BENEFIT PLANS                                                                           70,230                                    74,187
OTHER NONCURRENT LIABILITIES                                                                            9,961                                     8,592
                                                                                             -----------------                     --------------------
                                                                                                  $ 1,340,963                                 1,269,304
                                                                                             ====== =========                      ====================

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20160218006750r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20160218006750/en/

SOURCE: SJW Corp.

SJW Corp. 
Suzy Papazian, 408-279-7961 
General Counsel and Corporate Secretary


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